Case Study Description of Novartis Venture Fund: Valuation Dilemmas
The Novartis Venture Fund is considering investing into a start up, Genedata, and must take into account the valuation analysis by both the start up as well as Venture Valuation -- an independent boutique organization that specializes in valuing high growth potential startups. NVF uses the Venture Valuation inputs to determine how best to structure the next round of financing for Genedata and the case requires the reader to discuss and analyze pricing, further financing requirements, and exit strategy for the fund.
Authors :: Benoit Leleux, Victoria Kemanian, Atul Pahwa, Katrin Siebenburger
Swot Analysis of "Novartis Venture Fund: Valuation Dilemmas" written by Benoit Leleux, Victoria Kemanian, Atul Pahwa, Katrin Siebenburger includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Genedata Valuation facing as an external strategic factors. Some of the topics covered in Novartis Venture Fund: Valuation Dilemmas case study are - Strategic Management Strategies, Financial analysis, Financial management and Organizational Development.
Some of the macro environment factors that can be used to understand the Novartis Venture Fund: Valuation Dilemmas casestudy better are - – central banks are concerned over increasing inflation, talent flight as more people leaving formal jobs, there is backlash against globalization, increasing commodity prices, supply chains are disrupted by pandemic , increasing transportation and logistics costs, technology disruption,
increasing government debt because of Covid-19 spendings, cloud computing is disrupting traditional business models, etc
Introduction to SWOT Analysis of Novartis Venture Fund: Valuation Dilemmas
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Novartis Venture Fund: Valuation Dilemmas case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Genedata Valuation, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Genedata Valuation operates in.
According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of Novartis Venture Fund: Valuation Dilemmas can be done for the following purposes –
1. Strategic planning using facts provided in Novartis Venture Fund: Valuation Dilemmas case study
2. Improving business portfolio management of Genedata Valuation
3. Assessing feasibility of the new initiative in Organizational Development field.
4. Making a Organizational Development topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Genedata Valuation
Strengths Novartis Venture Fund: Valuation Dilemmas | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Genedata Valuation in Novartis Venture Fund: Valuation Dilemmas Harvard Business Review case study are -
Learning organization
- Genedata Valuation is a learning organization. It has inculcated three key characters of learning organization in its processes and operations – exploration, creativity, and expansiveness. The work place at Genedata Valuation is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Novartis Venture Fund: Valuation Dilemmas Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Organizational Resilience of Genedata Valuation
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Genedata Valuation does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Innovation driven organization
– Genedata Valuation is one of the most innovative firm in sector. Manager in Novartis Venture Fund: Valuation Dilemmas Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Ability to lead change in Organizational Development field
– Genedata Valuation is one of the leading players in its industry. Over the years it has not only transformed the business landscape in its segment but also across the whole industry. The ability to lead change has enabled Genedata Valuation in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Low bargaining power of suppliers
– Suppliers of Genedata Valuation in the sector have low bargaining power. Novartis Venture Fund: Valuation Dilemmas has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Genedata Valuation to manage not only supply disruptions but also source products at highly competitive prices.
Cross disciplinary teams
– Horizontal connected teams at the Genedata Valuation are driving operational speed, building greater agility, and keeping the organization nimble to compete with new competitors. It helps are organization to ideate new ideas, and execute them swiftly in the marketplace.
Diverse revenue streams
– Genedata Valuation is present in almost all the verticals within the industry. This has provided firm in Novartis Venture Fund: Valuation Dilemmas case study a diverse revenue stream that has helped it to survive disruptions such as global pandemic in Covid-19, financial disruption of 2008, and supply chain disruption of 2021.
Sustainable margins compare to other players in Organizational Development industry
– Novartis Venture Fund: Valuation Dilemmas firm has clearly differentiated products in the market place. This has enabled Genedata Valuation to fetch slight price premium compare to the competitors in the Organizational Development industry. The sustainable margins have also helped Genedata Valuation to invest into research and development (R&D) and innovation.
Digital Transformation in Organizational Development segment
- digital transformation varies from industry to industry. For Genedata Valuation digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Genedata Valuation has successfully integrated the four key components of digital transformation – digital integration in processes, digital integration in marketing and customer relationship management, digital integration into the value chain, and using technology to explore new products and market opportunities.
Training and development
– Genedata Valuation has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Novartis Venture Fund: Valuation Dilemmas Harvard Business Review case study by analyzing – employees retention, in-house promotion, loyalty, new venture initiation, lack of conflict, and high level of both employees and customer engagement.
Ability to recruit top talent
– Genedata Valuation is one of the leading recruiters in the industry. Managers in the Novartis Venture Fund: Valuation Dilemmas are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Analytics focus
– Genedata Valuation is putting a lot of focus on utilizing the power of analytics in business decision making. This has put it among the leading players in the industry. The technology infrastructure suggested by Benoit Leleux, Victoria Kemanian, Atul Pahwa, Katrin Siebenburger can also help it to harness the power of analytics for – marketing optimization, demand forecasting, customer relationship management, inventory management, information sharing across the value chain etc.
Weaknesses Novartis Venture Fund: Valuation Dilemmas | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Novartis Venture Fund: Valuation Dilemmas are -
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Novartis Venture Fund: Valuation Dilemmas, in the dynamic environment Genedata Valuation has struggled to respond to the nimble upstart competition. Genedata Valuation has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Genedata Valuation is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Novartis Venture Fund: Valuation Dilemmas can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
High cash cycle compare to competitors
Genedata Valuation has a high cash cycle compare to other players in the industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
Lack of clear differentiation of Genedata Valuation products
– To increase the profitability and margins on the products, Genedata Valuation needs to provide more differentiated products than what it is currently offering in the marketplace.
Increasing silos among functional specialists
– The organizational structure of Genedata Valuation is dominated by functional specialists. It is not different from other players in the Organizational Development segment. Genedata Valuation needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Genedata Valuation to focus more on services rather than just following the product oriented approach.
Capital Spending Reduction
– Even during the low interest decade, Genedata Valuation has not been able to do capital spending to the tune of the competition. This has resulted into fewer innovations and company facing stiff competition from both existing competitors and new entrants who are disrupting the industry using digital technology.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Novartis Venture Fund: Valuation Dilemmas, is just above the industry average. Genedata Valuation needs to redesign the compensation structure and incentives to increase the revenue per employees. Some of the steps that it can take are – hiring more specialists on project basis, etc.
Skills based hiring
– The stress on hiring functional specialists at Genedata Valuation has created an environment where the organization is dominated by functional specialists rather than management generalist. This has resulted into product oriented approach rather than marketing oriented approach or consumers oriented approach.
Low market penetration in new markets
– Outside its home market of Genedata Valuation, firm in the HBR case study Novartis Venture Fund: Valuation Dilemmas needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Workers concerns about automation
– As automation is fast increasing in the segment, Genedata Valuation needs to come up with a strategy to reduce the workers concern regarding automation. Without a clear strategy, it could lead to disruption and uncertainty within the organization.
Need for greater diversity
– Genedata Valuation has taken concrete steps on diversity, equity, and inclusion. But the efforts so far has resulted in limited success. It needs to expand the recruitment and selection process to hire more people from the minorities and underprivileged background.
Opportunities Novartis Venture Fund: Valuation Dilemmas | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities highlighted in the Harvard Business Review case study Novartis Venture Fund: Valuation Dilemmas are -
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Organizational Development industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Genedata Valuation can take advantage of these changes in consumer behavior to build a far more efficient business model. For example consumer regular ordering of products can reduce both last mile delivery costs and market penetration costs. Genedata Valuation can further use this consumer data to build better customer loyalty, provide better products and service collection, and improve the value proposition in inflationary times.
Learning at scale
– Online learning technologies has now opened space for Genedata Valuation to conduct training and development for its employees across the world. This will result in not only reducing the cost of training but also help employees in different part of the world to integrate with the headquarter work culture, ethos, and standards.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Genedata Valuation in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Organizational Development segment, and it will provide faster access to the consumers.
Developing new processes and practices
– Genedata Valuation can develop new processes and procedures in Organizational Development industry using technology such as automation using artificial intelligence, real time transportation and products tracking, 3D modeling for concept development and new products pilot testing etc.
Identify volunteer opportunities
– Covid-19 has impacted working population in two ways – it has led to people soul searching about their professional choices, resulting in mass resignation. Secondly it has encouraged people to do things that they are passionate about. This has opened opportunities for businesses to build volunteer oriented socially driven projects. Genedata Valuation can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Manufacturing automation
– Genedata Valuation can use the latest technology developments to improve its manufacturing and designing process in Organizational Development segment. It can use CAD and 3D printing to build a quick prototype and pilot testing products. It can leverage automation using machine learning and artificial intelligence to do faster production at lowers costs, and it can leverage the growth in satellite and tracking technologies to improve inventory management, transportation, and shipping.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Genedata Valuation can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Low interest rates
– Even though inflation is raising its head in most developed economies, Genedata Valuation can still utilize the low interest rates to borrow money for capital investment. Secondly it can also use the increase of government spending in infrastructure projects to get new business.
Reconfiguring business model
– The expansion of digital payment system, the bringing down of international transactions costs using Bitcoin and other blockchain based currencies, etc can help Genedata Valuation to reconfigure its entire business model. For example it can used blockchain based technologies to reduce piracy of its products in the big markets such as China. Secondly it can use the popularity of e-commerce in various developing markets to build a Direct to Customer business model rather than the current Channel Heavy distribution network.
Loyalty marketing
– Genedata Valuation has focused on building a highly responsive customer relationship management platform. This platform is built on in-house data and driven by analytics and artificial intelligence. The customer analytics can help the organization to fine tune its loyalty marketing efforts, increase the wallet share of the organization, reduce wastage on mainstream advertising spending, build better pricing strategies using personalization, etc.
Creating value in data economy
– The success of analytics program of Genedata Valuation has opened avenues for new revenue streams for the organization in the industry. This can help Genedata Valuation to build a more holistic ecosystem as suggested in the Novartis Venture Fund: Valuation Dilemmas case study. Genedata Valuation can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Using analytics as competitive advantage
– Genedata Valuation has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in the sector. This continuous investment in analytics has enabled, as illustrated in the Harvard case study Novartis Venture Fund: Valuation Dilemmas - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Genedata Valuation to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Building a culture of innovation
– managers at Genedata Valuation can make experimentation a productive activity and build a culture of innovation using approaches such as – mining transaction data, A/B testing of websites and selling platforms, engaging potential customers over various needs, and building on small ideas in the Organizational Development segment.
Threats Novartis Venture Fund: Valuation Dilemmas External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Novartis Venture Fund: Valuation Dilemmas are -
Easy access to finance
– Easy access to finance in Organizational Development field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Genedata Valuation can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Technology disruption because of hacks, piracy etc
– The colonial pipeline illustrated, how vulnerable modern organization are to international hackers, miscreants, and disruptors. The cyber security interruption, data leaks, etc can seriously jeopardize the future growth of the organization.
Increasing wage structure of Genedata Valuation
– Post Covid-19 there is a sharp increase in the wages especially in the jobs that require interaction with people. The increasing wages can put downward pressure on the margins of Genedata Valuation.
Technology acceleration in Forth Industrial Revolution
– Genedata Valuation has witnessed rapid integration of technology during Covid-19 in the Organizational Development industry. As one of the leading players in the industry, Genedata Valuation needs to keep up with the evolution of technology in the Organizational Development sector. According to Mckinsey study top managers believe that the adoption of technology in operations, communications is 20-25 times faster than what they planned in the beginning of 2019.
New competition
– After the dotcom bust of 2001, financial crisis of 2008-09, the business formation in US economy had declined. But in 2020 alone, there are more than 1.5 million new business applications in United States. This can lead to greater competition for Genedata Valuation in the Organizational Development sector and impact the bottomline of the organization.
Environmental challenges
– Genedata Valuation needs to have a robust strategy against the disruptions arising from climate change and energy requirements. EU has identified it as key priority area and spending 30% of its 880 billion Euros European post Covid-19 recovery funds on green technology. Genedata Valuation can take advantage of this fund but it will also bring new competitors in the Organizational Development industry.
Capital market disruption
– During the Covid-19, Dow Jones has touched record high. The valuations of a number of companies are way beyond their existing business model potential. This can lead to capital market correction which can put a number of suppliers, collaborators, value chain partners in great financial difficulty. It will directly impact the business of Genedata Valuation.
Stagnating economy with rate increase
– Genedata Valuation can face lack of demand in the market place because of Fed actions to reduce inflation. This can lead to sluggish growth in the economy, lower demands, lower investments, higher borrowing costs, and consolidation in the field.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Genedata Valuation can face downward pressure on margins from increasing competition from international players. The international players have stable revenue in their home market and can use those resources to penetrate prominent markets illustrated in HBR case study Novartis Venture Fund: Valuation Dilemmas .
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Novartis Venture Fund: Valuation Dilemmas, Genedata Valuation may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Organizational Development .
High level of anxiety and lack of motivation
– the Great Resignation in United States is the sign of broader dissatisfaction among the workforce in United States. Genedata Valuation needs to understand the core reasons impacting the Organizational Development industry. This will help it in building a better workplace.
Aging population
– As the populations of most advanced economies are aging, it will lead to high social security costs, higher savings among population, and lower demand for goods and services in the economy. The household savings in US, France, UK, Germany, and Japan are growing faster than predicted because of uncertainty caused by pandemic.
Regulatory challenges
– Genedata Valuation needs to prepare for regulatory challenges as consumer protection groups and other pressure groups are vigorously advocating for more regulations on big business - to reduce inequality, to create a level playing field, to product data privacy and consumer privacy, to reduce the influence of big money on democratic institutions, etc. This can lead to significant changes in the Organizational Development industry regulations.
Weighted SWOT Analysis of Novartis Venture Fund: Valuation Dilemmas Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers in the HBR case study Novartis Venture Fund: Valuation Dilemmas needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants.
We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –
First stage for doing weighted SWOT analysis of the case study Novartis Venture Fund: Valuation Dilemmas is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.
Second stage for conducting weighted SWOT analysis of the Harvard case study Novartis Venture Fund: Valuation Dilemmas is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.
Third stage of constructing weighted SWOT analysis of Novartis Venture Fund: Valuation Dilemmas is to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that Genedata Valuation needs to make to build a sustainable competitive advantage.